Solar really is getting cheaper, report says

Solar incentives seem to be working to both increase the number of solar installations in the U.S. and bring down the initial cost, according to a report released Wednesday by the Lawrence Berkeley National Laboratory.

"Findings...show that, after a three-year plateau, costs decreased by 3.6 percent from 2007 to 2008, marking a pivotal year for the American solar industry," said the report (PDF).

Broken down into real 2008 dollars, the report estimated that the actual cost of installing photovoltaic solar systems--excluding tax credits or financial incentives--was $10.80 per watt in 1998 versus $7.50 per watt in 2008.

Last year, the average cost of installation was $2.80 per watt for residential photovoltaic, when incentives and tax credits are counted, and $4.00 per watt for commercial.

The report attributed rising fuel prices since 1998 and government incentives for alternative energy to the solar market boom. There has been a significant increase in photovoltaic installations in the U.S. since 2007. Of the 566 megawatts of solar added to the U.S. grid since 1998, an estimated 293 megawatts of photovoltaic were added in 2008 alone. That recent uptick was attributed in part to "more lucrative" federal investment tax credits adopted for commercial photovoltaic systems in 2006.

If that figure of 566 megawatts seems low given the plethora of solar installation announcements from private and public organizations over the past few years, keep in mind these figures are for grid-connected systems only.

The report data evaluated the cost outlay for 52,000 residential and commercial installations, about 71 percent of all the grid-connected photovoltaic systems that were installed in the U.S. between 1998 and 2009. The report data did not include cost outlay for those residential or commercial systems operating off the grid.